Question

P13-7 Calculating Returns and Standard Deviations [LO1]

Consider the following information:

  

		Rate of Return if State Occurs
State of Economy	Probability of State of Economy	Stock A	Stock B
Recession	0.20	0.06	-0.20
Normal	0.70	0.09	0.17
Boom	0.10	0.14	0.32

  

Required:

(a)	Calculate the expected return for Stock A. (Do not round your intermediate calculations.)
	(Click to select)8.90%9.19%10.60%11.37%8.01%

  

(b)	Calculate the expected return for Stock B. (Do not round your intermediate calculations.)
	(Click to select)11.10%9.67%12.65%10.54%11.54%

  

(c)	Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.)
	(Click to select)2.07%1.46%2.17%1.97%2.15%

  

(d)	Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
	(Click to select)16.17%11.43%17.98%15.36%16.82%

Answer 1